EMCORE is a fiber optics and solar power company that turns light into revenue. Its high-tech fiber optics products use light to transmit data, video, and voice information much faster than traditional copper cables, while its Gallium arsenide photovoltaic cells turn light into electricity with extremely high efficiency. The company sells its products to a variety of customers, from the U.S. government to aerospace companies to renewable energy vendors, and its products are applied in a variety of functions, from satellite power to telecommunications networking. EMCORE competes in the fiber optics industry with companies like Alcatel-Lucent, Tellabs, Motorola, and Corning; in the solar power industry, it competes with companies like SunPower, Suntech, and First Solar.

EMCORE is an emerging leader in fiber-to-the-premises (FTTP) telecom infrastructure. Its recent acquisition of Intel's Fiber Optic Telecommunications group puts it in prime position to take advantage of the entry of telecom giants Verizon and AT&T into the FTTP market, though leading infrastructure companies like Alcatel and Cisco could take EMCORE's business simply because they are larger and better established.

Despite EMCORE's growth opportunities in fiber optics, most of the recent attention the firm has attracted has been because of its Concentrating Photovoltaic Systems (CPV) systems. These utility-scale solar power generators use lenses and mirrors to concentrate light onto Gallium arsenide solar cells - and can generate electricity with efficiencies as high as 37%. Regular, commercially-available silicon solar cells go up to 22%, so EMCORE's systems have a significant advantage. Furthermore, Gallium arsenide is not subject to the price volatility that has plagued the silicon industry for the past few years due to an under-capacity for silicon refining. The only catch for EMCORE's CPV systems is that they don't work without direct sunlight, making them less than ideal for any landscape except one that is very hot and dry, like a desert. In addition, the technology is very costly to produce - EMCORE has lost money in 14 of the last 15 years, for a total of $340 million in losses.[1] Still, as more of the world's governments pass legislation favorable to renewable energy, EMCORE's business has the potential to grow, as electric utilities start to look for ways to fulfill clean energy mandates.

Business and Financials

EMCORE, EMKR, produces high-efficiency solar cells that use magnified light to produce electricity. The company has a market capitalization of $716 million, employ 738 people, and is based in Albuquerque, NM.

EMCORE operates two main business segments:

  • Fiber Optics: EMCORE provides fiber optic infrastructure for the telecommunications industry. Fiber optics allows light to carry information, rather than electricity, allowing for faster transfer speeds and larger information loads. Fiber optic technology made by EMCORE is used in a number of applications: cable television delivery, broadband internet access, and high-speed networking backbones. EMCORE also sells satellite communications infrastructure and consumer fiber optics (used in items like optical computer mice).
  • Photovoltaics: EMCORE has its hand in two different solar markets: satellite power and terrestrial solar power. The company originally developed satellite photovoltaic (PV) cells, using both Gallium arsenide (GaAs) cells and covered interconnected cells (CICs) to make integrated solar panels to power small spacecraft. For its land-based solar installations, EMCORE adapted these cells to Concentrating Photovoltaic Systems (CPVs), which use lenses and mirrors to concentrate the sun's rays onto a GaAs or CIC array - leading to very high efficiencies.

First Quarter 2010 Summary

Revenue for the first quarter of 2010 was $48.2 million, a year over year increase of 11%. Specifically, the Fiber Optics segment generated $30.2 million in revenue, a 6% increase over the same period in 2009--this was due to significant increase in demand for CATV products, which offset the decrease in demand for telecom products. The Photovoltaics segment generated $18 million in revenue, a 21% increase over the same period in 2009--this was due to increased demand for satellite solar power products. In addition, consolidated operating expenses amounted to $16.6 million, a year over year decrease of 12%.[2]

Fourth Quarter 2009 Summary

On December 15, 2009, EMCORE posted better than expected Q4 results. Although EMCORE still lost 11 cents per share, it was better than the expected 12 cents per share. Similarly, overall revenues were down 33% to 40.5 million dollars, but that still exceeded analyst expectations. During the same quarter a year ago, EMCORE posted a 53 cents a share loss, and the narrowing of losses can be partially attributed to leaner operating expenses which have been halved to 18 million dollars. In a sign that EMCORE expects their operating environment to improve in the future, they have upped their estimates for Q1.[3]

EMCORE Segment Breakdown ($ thousands} thousands)[4]
2009 Revenue 2009 % of Revenue 2008 Revenue 2008 % of Revenue 2007 Revenue 2007 % of Revenue
Fiber Optics 114,134 65% 171,276 72% 110,377 65%
Photovoltaics 62,222 35% 68,027 28% 59,229 35%
Total Revenue 176,356 100% 239,303 100% 169,606 100%
North America 108,563 62% 134,796 56% 124,012 74%
Asia 50,973 29% 73,311 31% 34,574 20%
Europe 8,878 5% 20,420 8% 10,821 7%
Other 7,942 4% 10,776 5% 199 -

In 2007, EMCORE saw operating losses of $57.456 million: $25.877 million for the fiber optics segment, $11.202 million for the PV segment, and $20.377 million for corporate expenses. The company started in 1984, but has built up net losses over the years amounting to $343.6 million.

EMCORE sells its fiber optics equipment to telecommunications, data communications, and computer equipment manufacturers, as well as major aerospace companies. Its photovoltaics customers include renewable electric utilities, renewable energy distributors, and other concentrated solar installers. In 2007, the company's top 5 customers made up 49% of company revenue.

13% of EMCORE's 2007 revenue came from contracts with the U.S. government; these contracts expose EMCORE to potential risks, like congressional budget cuts, government audits and investigations, and sudden contract terminations (with services up to that point paid).

Though EMCORE's fiber optics business is its largest revenue-earner, it has received a lot of attention in the media recently for its photovoltaics segment, because of the sudden boom in the international solar power market. EMCORE's current CPV backlog is $86 million[5].

CPV: Not Your Father's Solar Array

CPV is a method of solar power generation that has experienced rapid growth in the last few years. It hasn't earned as much media attention as most other solar genres, however, because it's applications are different. Most solar power companies produce PV panels to be installed on offices or homes, thereby powering individual buildings. Because these panels have lower efficiencies, they are impractical and expensive when used to build large-scale power generating facilities. Concentrated Photovoltaics is far more suited to utilities-scale power generation. With a much higher efficiency than other PV systems, and a design that benefits from economies of scale, CPV can generate much more power at a lower cost than traditional (silicon) solar panels. For this reason, CPV is growing faster as a renewable, utility-scale energy source than any other except wind.

EMCORE Recently Purchased the Optical Telecommunications Assets of Intel

In late February, 2008, EMCORE and Intel finished an acquisition agreement whereby Intel sold the telecommunications segment of its Optical Platforms Division to EMCORE for $85 million, cash and stock; the deal was financed through the issuance/sale of $100 million in securities. The purchase allows EMCORE access to emerging telecom markets like Dense Wavelength Division Multiplexing (DWDM), which allows multiple signals to be sent along the same optics cable simultaneously, greatly increasing data transmission speeds.

Trends and Forces

The Entry of Telecom Giants into the Fiber Optics Industry is a Threat to Smaller Firms like EMCORE

As a medium for telecommunications, fiber optics is much faster than conventional wire, because it uses light instead of electricity to send information. EMCORE's strategy in this market is to acquire and develop technology that allows it access to developing fiber optics applications; because there have been so few firms willing to risk spending big R&D bucks on developing fiber optic technology, while EMCORE has, the company has been a leader in the emerging industry.

One emerging application EMCORE is involved in has been Fiber-to-the-Premises (FTTP). In the past, consumer telecom networks had a high-speed backbone with lower speed cables running to users' homes and offices. The high-speed backbones were able to carry the combined capacity of all the users, but the infrastructure running to the users severely limited the speed and bandwidth available to consumers. FTTP allows for much larger bandwidth and much faster delivery speeds, which are essential for modern "triple-play" deliveries in which access providers offer video, data, and telephony services. It also requires the installation of new transmission, wiring, and receiving infrastructure.

Currently, two major service providers are rolling out FTTP fiber optic access plans: AT&T, with U-verse FTTP, Verizon, with FiOS, while Comcast is rolling out a competing technology called Docsis 3.0. Consumers are increasingly streaming and downloading large files, like movies, and engaging in video-chatting, using the small cameras that are attached to many new laptops. Both AT&T[6] and Verizon[7] offer "high-speed" connections of speeds up to 3 Mbps - but with the demand that services like video-chatting and streaming video put on networks, the 6 MBPS offered by U-Verse[8] and the 50 MBPS offered by FiOS[9] look far more appealing. The telecom giants jumping on the FTTP bandwagon signals that fiber optics is set to go mainstream, and demand for the infrastructure products sold by EMCORE will grow. Though it's likely that the larger telecom infrastructure companies like Alcatel and Tellabs will receive most of the fiber optics business, EMCORE's recent acquisition of telecom giant Intel's Fiber Optics Telecommunications segment means the company plans to compete with the big boys.

EMCORE's use of Gallium Arsenide Allows it to Avoid Rising Costs from the "Silicon Shortage"

EMCORE, unlike most other PV manufacturers, does not use polysilicon for its cells. Instead, it uses Gallium arsenide. In the past, companies like MEMC Electronic Materials (WFR) produced silicon wafers for the semiconductor industry. Now, with the advent of solar power and its rapid growth, demand for silicon has increased greatly, leading to its under-supply as production capacity is not enough to meet current demand. This under-supply has led to rising prices for solar equipment which in turn raises the price of solar power compared to other clean energy production technologies such as wind and ethanol. Furthermore, higher silicon prices mean higher production costs for solar companies - and lower margins. EMCORE's use of Gallium arsenide allows it to avoid the volatility of silicon prices, which will fluctuate in the next few years as new solar companies and silicon producers continue to enter the market. However, Gallium arsenide is a rather exotic compound, while silicon is one of the most abundant on Earth; in the long run, silicon prices will fall to a manageable level, taking away some of the cost advantage that GaAs currently has. Researchers at Sandia National Laboratory, however, found that Gallium arsenide can be cost competitive with silicon wafers in concentrated PV systems assuming that efficiencies "reach between 25 and 30%"[10] - a level that EMCORE has surpassed by 7%.

Concentrating Photovoltaic Systems from EMCORE have High Efficiencies and Low Costs

EMCORE's Gallium arsenide PV cells, when used in a Concentrating Photovoltaic System, can see efficiencies up to 37%[11] - the highest commercially available from a publicly-traded company. Competitors like SunPower have only been able to reach efficiencies of 22%[12], making them far less economical for utilities-scale installations. Furthermore, EMCORE's Vice President and General Manager of Solar Power Systems stated publicly that "EMCORE's CPV systems are optimized for the lowest cost-per-watt of any utility-scale photovoltaic power system."[13] Together, EMCORE's high efficiency and low cost make its solar systems more economical than competitors' for utility-scale solar arrays.

Solar panel efficiency and production costs are important to the entire solar industry because Oil and gas prices have trended upwards over the past several years. As rising oil and gas prices lead to more expensive commercial electricity, consumers may start to demand new, cheaper sources of power. Solar power is currently less efficient than other energy sources, even wind. Sunlight, however, is available in massive quantities for half the day, and is free, unlike oil or coal. For these reasons, when oil and gas prices rise, solar power becomes a more viable alternative, despite the current level of inefficiency. Concurrently, as solar power's efficiency rises, it becomes more competitive with oil and gas. The solar industry's R&D focus is on increasing this efficiency while minimizing the use of inputs like silicon, in order to keep manufacturing costs down. If solar companies can develop technology that allows more electricity to be produced with thinner PV cells, for less money, then solar power will become more competitive.

With CPVs, No Sun Means No Power

EMCORE's CPV technology may seem like the panacea to the solar industry's ills, but it has one major problem: it requires direct solar radiation. Diffuse light, which is light that is scattered off of particles in the atmosphere, allowing us to see during the day even when the sky is overcast, cannot be concentrated by the arrays mirrors and lenses. Because of this, if a cloud passes over the sun, EMCORE's installations will stop generating electricity[14]. This means EMCORE's systems are only really useful in areas like the desert, where it's hot and dry and clouds are unlikely to form. Traditional solar panels, on the other hand, work in low light conditions because they can still use scattered light to generate. Companies like First Solar that deal in thin-film, Cadmium telluride panels benefit from using materials that can achieve higher lower-light efficiencies, relative to peak efficiency, than other panel materials[15].

EMCORE's Weak Track Record Makes it Desperate for Customers

The last time EMCORE made a profit was in 1995; in the last 15 years, the company has totaled $340 million in losses. In recent months, the company has signed sales contracts with a number of less-than-reliable customers, possibly because it is desperate to reverse its dismal performance. Out of the $68 million promised by Green and Gold Energy, a company headed by a CEO who once touted the possibility of perpetual motion machines, EMCORE has only seen $500,000 to date. EMCORE has also signed multiple "Memorandums of Understanding" (not firm, binding contracts) to sell hundreds of megawatts of solar systems to companies like SunPeak, a company with only 4 verified employees and zero credit history, and World Water and Solar Technologies, a company with $36 million in losses over the last four years and a CFO who was involved in a fraud scheme at his previous company in Spain.[16]

Legislative Support for Solar Power has Taken Off Worldwide

Governments worldwide have implemented legislation to encourage alternative energy production, due to political pressure from public concerns about climate change and energy independence. Examples include:

  • California's mandate that 25% of electricity come from clean sources by 2020 and 75% by 2050
  • California's One Million Solar Homes initiative that gives subsidies to developers to build fully solar powered homes
  • The European Union's stated desire to get 22% of its energy from clean sources by 2010
  • China's Renewable Energy Law aiming to raise the total percentage of renewable energy used in the country to 10% by 2020

Emissions caps and clean energy mandates that are supported by subsidies and tax cuts make solar energy relatively cheaper. This means that corporations and utilities companies may turn to clean energy sources to generate electricity for manufacturing facilities and power plants, directly benefiting solar power companies like EMCORE. Without government support, however, solar companies would have difficulty vending their products, as solar energy is currently much less cost effective than coal or natural gas; while the average natural gas plant costs $1,200 - $1,600 per kilowatt installed[17], the average solar installation can cost $8,000 per kilowatt installed[18].


In the fiber optics industry, EMCORE competes with other fiber optics networking companies for infrastructure contracts.

  • Alcatel-Lucent - One of the largest telecom infrastructure companies, ALU has already been installing optical FTTP networks for Australian service provider Telstra and AT&T-acquired SBC.
  • Tellabs - Acquired by Tellabs, Advanced Fibre Communications, Inc. won the original deal to install FTTP networks for Verizon.
  • Motorola - Motorola was the second company chosen to install optical FTTP infrastructure for Verizon, and was awarded a five-year supply contract in 2005.
  • Finisar and Luminent - These two companies are leading suppliers of optical modules, which are key components of optical fibers; Finisar is the world's "highest volume optical module supplier"[19].
  • Corning - In October, 2007, Corning released an FTTP fiber that can sharply bend while losing only a tenth of the information of that the old fiber would with the same bend[20]. This allows for the new fiber to be deployed in trickier installation locations, like apartment buildings.

Though EMCORE isn't yet a a major player in the solar market (it entered the terrestrial solar business in 2006), among utilities-scale renewable energy sources, CPV is growing faster than any other except wind. Some of EMCORE's solar competitors, with 2005 market share[21], include:

  • SunPower (SPWR) (insignificant in 2005) - One of the fastest growing solar companies, with one of the most efficient cells around
  • Sharp Electronics (24%) - The largest photovoltaic cell manufacturer in the world.
  • Suntech Power Holdings (4%) - A Chinese photovoltaic cell company that is muscling its way into world solar markets.
  • JA Solar Holdings, (insignificant in 2005) - A Chinese PV company that only sells monocrystalline solar cells; it lets its customers take care of building the modules and systems.
  • Solarfun Power Holdings (insignificant in 2005) - Another Chinese PV company that operates 90% in Europe and makes most of its money by selling modules, rather than individual cells.
  • Kyocera (8%) - A Japanese electronics company that is also a major manufacturer of solar cells
  • Q-Cells (9%) - A privately owned, German solar manufacturer
  • First Solar (insignificant in 2005) - A thin cell solar panel manufacturer that uses cadmium telluride instead of silicon for its cells.
  • BP (5%), Mitsubishi (6%), and Sanyo (7%) - Not primarily photovoltaic cell manufacturers, but heavy market competitors nonetheless.
  • Evergreen Solar (insignificant in 2005) - A solar company that produces string ribbon PV cells and operates at all production levels from silicon wafer to power system.
  • Energy Conversion Devices - This company uses amorphous thin-film silicon in its ultra-thin, albeit low-efficiency solar cells.
Industry Conversion Efficiencies
Manufacturer Conversion Efficiency
SunPower(Polysilicon) 23.4%[22]
Suntech Power Holdings(Polysilicon) 18%[23]
Sharp (Polysilicon) 13%[24]
Kyocera (Polysilicon) 18.5%[25]
Solarfun (Polysilicon) 17.2%[26]
JA Solar Holdings (Monosilicon) 17.7%[27]
Trina Solar(Mono & Polysilicon) 16.6%[28]
Evergreen Solar (String Ribbon) 15%[29]
EMCORE (GaAs Concentrated Solar System) 37%[30]
Energy Conversion Devices (Amorphous Silicon Thin Film) 8.5%[31]
First Solar (CdTe Thin Film) 10.5%[22]
DayStar Technologies(CIGS Thin Film) 14% [32]
Ascent Solar (CIGS Flexible Thin Film) 9.5% [33]


  1. Citron Research
  2. EMKR Q1 2010 10-Q Pg.33
  3. Emcore Q4 results beat estimates, shares rise, December 15, 2009
  4. EMKR 2007 10-K, Page 47
  5. EMCORE News Releases: "EMCORE Receives $39 Million in New Orders for Concentrator Solar Cell Receiver Assemblies from Green and Gold Energy"
  6. TecHomeBuilder: "AT&T Deploys FTTP at Nevada's Kiley Ranch"
  7. Verizon Online: Residential Services
  8. TecHomeBuilder: "AT&T Deploys FTTP at Nevada's Kiley Ranch"
  9. Ars Technica: "Verizon, Comcast pump up the bandwidth. Where's AT&T?"
  10. Sandia National Laboratory, Photovoltaic Systems Research & Development, Gallium Arsenide Solar Cells
  11. EMCORE.com: Terrestrial Solar Cells and Receivers"
  12. Renewable Energy World: "SunPower's New Solar Panel Is 22% Efficient"
  13. EMCORE News Releases: "EMCORE Corporation Enters Into A Multi-Year Agreement To Supply Solar Concentrator Photovoltaic Systems for Utility Scale Power Projects In The Southwestern US"
  14. Renewable Energy World: " The Rebirth of Concentrating Photovoltaics", Comment by Windy Dankoff, October 20th, 2006
  15. http://www.beck-energy.de/data/BS_cts_eng.pdf
  16. Citron Research: "Citron Research shines some daylight on Emcore’s solar business."
  17. Mechanical Engineering Power 2003: "Bubble Buster"
  18. WindWorks.org, "Solar PV Current Installed Prices per kW in California & Elsewhere"
  19. Nyquist Capital: " Cornering the Commodity Market"
  20. TelephonyOnline: "FTTH Con: Corning Gets the Bends"
  21. CIBC Initiating Coverage, SOLF, January 29th, 2007
  22. 22.0 22.1 [http://www.renewableenergyaccess.com/rea/news/story?id=46286
  23. Forbes - Sun King; SunPower's New Solar Panel Is 22% Efficient
  24. SharpUSA Product Brochure
  25. Kyocera - Solar Timeline
  26. Solarfun Website
  27. http://jasolar.com/Web/products-en.asp
  28. TSL 20-F 2007 Pg. 7
  29. ESLR 2007 Earnings Call Transcript, Page 1
  30. EMCORE.com: Terrestrial Solar Cells and Receivers"
  31. ENER F1Q08 Earnings Call Transcript, Page 5
  32. DSTI 10-k 2007 Pg 1
  33. Ascent First Quarter 2008 10-Q Pg 23
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